Institutions, Institutional Change and Economic Performance

Institutions, Institutional Change and Economic Performance, published in 1990 by Cambridge University Press, is Douglass North's founding synthesis of New Institutional Economics applied to long-run economic history. North defined institutions as the humanly devised constraints, formal rules such as laws and constitutions and informal norms such as customs and codes of conduct, that structure political, economic and social interaction, together with how credibly those rules are enforced. He argued that differences in institutions, far more than differences in technology or physical resources, explain why some economies sustain long-run growth while others remain persistently poor, because institutions determine the transaction costs of production and exchange and shape whether individuals expect the gains from productive investment to be secure.